Malaysia's Transition Into Solar Energy

In 2001, Malaysia introduced the Fifth Fuel Policy initiated under the Eight Malaysia Plan (2001-2005), which included renewable energy as the fifth fuel strategy in the national energy mix. And this marked the beginning of Malaysia’s energy transition from fossil fuel to sustainable energy.

To optimize the use of renewable energy resources and reduce carbon emissions, a target was set at 500 MW grid-connected power generations by 2005 from renewable energy sources.

With the Fifth Fuel Policy in place, the Government rolled out RE-related programmes such as the Small Renewable Energy Power Programme (SREP); the Biogen Full-Scale Model Demonstration Project (Biogen FSM); the Malaysia Building Integrated Photovoltaic Project (MBIPV); and the Centre for Education and Training in Renewable Energy and Energy Efficiency (CETREE).

In 2010, the then Cabinet introduced the National Renewable Energy Policy and Action Plan (NREPAP) to overcome the barriers to renewable energy deployment in Malaysia. Then, from NREPAP came the Renewable Energy Act 2011 [Act 725], which provides for the establishment and implementation of the Feed-in Tariff (FiT) mechanism to accelerate the generation of renewable energy from solar photovoltaic, biogas, biomass, and small hydropower, and to provide for related matters.

Ultimately, the purpose of the FiT mechanism was to promote renewable energy deployment around the world by guaranteeing access to the grid and setting a favourable price per unit of energy generated. This way, it ensures that renewable energy becomes a viable long-term investment for both residential and commercial customers.

Under the FiT scheme, SEDA Malaysia saw strong uptake of quotas offered in the solar PV sector. At the end of 2012, the total capacity of FiT applications for the solar sector was 51.45MW from 479 applications. A year later, the Authority noted the total installed capacity applications shot up by 82% to 162.88MW.

In 2016, the Sustainable Energy Development Authority (SEDA) Malaysia implemented the Net Energy Metering (NEM) mechanism following the strong uptake of FiT quotas offered to the solar PV sector. However, there was a low uptake rate of only 27.8MW installed capacity by the end of 2018. In the following year, after the launching of the NEM 2.0 programme, 1,252 applications representing 102.41MW of the total capacity were approved in 2019 alone, bringing the cumulative approved capacity to 130.21MW.

In other words, there was an increase of nearly 3.68 times the total capacity approved from 2016 to 2018. On top of that, the 500MW quota offered by NEM 2.0 was fully taken up ahead of its closing date. In 2020, KeTSA (Kementerian Tenaga dan Sumber Asli) announced the commencement of NEM3.0 with a 500MW quota. This scheme will be carried out in phases from 1st February 2021 until 31st December 2023. As of November 2021, 10,270 solar PV projects have been commissioned for FiT with a combined capacity of 387.03MW.